Amazon Fighting iPhone With Fire

Amazon may have overestimated their new Fire phone’s pull according to the market, and have drastically cut its price on the eve of a new iPhone reveal. Projections by analysts before the device’s release had millions of units sold by now, but sales have been dismal to say the least. To compound this problem, iPhone 6 unveils tomorrow, bringing millions of customers away from Fire consideration with rumored improvements across the board for the popular device. The online retailer hopes their inclusions, plus the price slash, will be enough to justify the expensive four-year process this device was for the company.

Revealed in June in front of sixty-thousand people, the Fire phone was supposed to combine the online convenience of the retailer with a more accessible version of their Kindle tablets. Consumers, however, are not responding as the fan base seems to still be quite small. Official sales numbers have not been released by Amazon or AT&T—the exclusive carrier—but some retailers were quoted saying that their shirts and signage on launch day added up to “nothing.” One store in the San Francisco Bay area estimated only 10 Fire phones were sold during the opening event at their establishment while a smaller store claimed to sell only one.

Amazon, through seeing the whole picture, has decided that the Fire phone needed a massive slash in price, a primary concern for customers, to compete with iPhone. The original $200 price is gone; now, their device will only cost 99 cents with the only stipulation being a mandatory two-year contract with AT&T. On top of that, consumers would have a free year of Amazon Prime, a $99 value. Prime is a service that gives high-definition streaming options, free two-day shipping on purchases and access to their online music streaming service. This low price is justified by the large company because many of their advisors feel that those who buy the phone will make up the price in products purchased on the website.

Commentators outside the company are not as optimistic. “If history is any indication,” warns Wayne Lam of I.H.S. Technology on the price drop, “this doesn’t usually work.” He goes on to cite the ill-fated Facebook phone that followed the same price point, but never found a market. Senior analyst at Piper Jaffney Gene Muster explained that their expectations for the device were modest and yet “the phone seems to be shy of those.” He then says that “the Fire was looking for a feature,” and finally found one with this low price.

IPhone 6’s unveiling presents even further problems for Amazon and their Fire phone. Rumors are running rampant that the 6 will have a larger screen, double or quadruple the storage depending on the type of Fire phone and, perhaps most importantly, a fan base that is ready and willing to buy. There is also, then, the connectivity between the reported iWatch, iPhone and the other Apple products that have the market saturated. Jan Dawson of Jackdaw Research said, in regard to the Amazon Fire phone, that it was for the “die-hard” fans only, and says that these low sales show that there “don’t seem to be that many of those.”